LEA'S LIONS ROAR

In a PEI interview last summer, Lyndon Lea said he and his team at Lion Capital had “their heads down and their tails up”, as they were trying to convert the investment opportunities coming the firm's way.

Apparently, the time since then has been productive. Investors in Lion Capital I, which closed in June 2005 on €820 million, have been advised that the firm is preparing to raise up to €2 billion for a follow-up structure.

The target on the cover of the private placement memorandum will be €1.5 billion, but to accommodate the anticipated extra demand, the fund will have a hard cap of €2 billion, more than double Lion's first fund. The marketing effort will focus primarily on existing limited partner relationships.

At its annual investor meeting, Lion Capital said Fund I was 80 percent deployed. The firm has put to work more than €1 billion in equity, including capital committed by investors in co-investments.

Moreover, according to a limited partner, the fund has already returned 36 percent of committed capital. Distributions have come from Weetabix, a breakfast cereal manufacturer, which Lion has recapitalised twice, and from a recapitalisation of Jimmy Choo, a premium shoe brand.

Once the new fund has been raised, Lion aims to complete between three and four deals per year.

Lion Capital spun out of Hicks Muse Tate & Furst two years ago. Since gaining its independence, Lion has focused on branded consumer businesses in Europe, though it enjoyed its first US success this summer with the acquisition of American Safety Razor, a private label manufacturer of razors.

Lea's team includes founding partners Neil Richardson, who joined from Kohlberg Kravis Roberts, and Robert Darwent, who came with Lea from Hicks, Muse, Tate & Furst.

Two senior appointments made in the early months following the spin-out underlined the focus on consumer brands. Javier Ferrán, joined after 20 years at Bacardi Group, the drinks manufacturer, where he was president and chief executive of Bacardi in Europe, the Middle East and Africa. George Sewell joined after 32 years at Quaker Oats, the cereal maker. He became president of Quaker European Foods in 1995, a position he held until 2004.

According to the investor, Lion is building the firm's infrastructure ahead of the fundraising with four junior hires, to take the number of associates to 10. Lion Capital declined to comment.

DOUGHTY WALKS AWAY FROM LISTING
Doughty Hanson, the pan-European private equity provider, has shelved plans to list a €1 billion private equity vehicle on the Euronext Stock Exchange in Amsterdam. The firm released a statement saying “concerns over the trading performance of similar recent transactions, which trade at discounts of up to 15 percent compared to the IPO price, mean that the offering has been postponed so that investors are not exposed to any potential discount.” Doughty, headed by founders Nigel Doughty and Richard Hanson, would have been the third private equity group to list a fund on Euronext in 2006.

FERD RAISES NORWAY'S LARGEST BUYOUT FUND
Ferd Private Equity, a Norwegian buyout firm, has raised NOK4.25 billion (€501.4 million; $628 million) for its second fund, the largest fundraising for a Norwegian private equity firm, according to managing partner Gert Munthe. Munthe said that the investor base was split between roughly 75 percent from Norwegian institutions and 25 percent from international investors, including Goldman Sachs, Standard Life, AGF and Third Swedish National Pension Fund, the latter also an investor in Ferd Private Equity's vintage-2005 NOK2 billion debut fund. UBS was the placement agent for Fund II.

ELECTRA RETURNS TO FULL PRIVATE EQUITY INVESTING
Electra Private Equity, a UK-quoted investment trust, is lifting restrictions on its investment in private equity, seven years after it partially suspended its activity while defending itself from a hostile bid by 3i, a rival. The board has now proposed to return to full-scale investing, instead of only being allowed to reinvest a third of the profits from portfolio realisations. It has decided to pursue the new strategy because of its success in realising value from its portfolio since the change of investment strategy in April 1999.

TRUELL RETURNS WITH PENSION PRODUCT
Edmund Truell, founder of private equity firm Duke Street Capital, has launched the Pension Insurance Corporation with backing from Christopher Flowers, a US financial services buyout specialist, and a £1 billion fund (€1.5 billion; $1.9 billion) to target mature pension fund liabilities. Truell's project has won cautious support from the buyout industry, which has tended to avoid deals with companies facing onerous pension fund liabilities. Truell intends to put in place reinsurance operations which will relieve pension fund sponsors of the burden of supporting large pension schemes. Apart from Flowers, Truell has equity backing from Swiss Re, ABN AMRO, Coller Capital, HBOS, US hedge fund Cycladic, Royal Bank of Scotland and Sampo Life.

KELSO CLOSES £100M FUND
Kelso Place Asset Management, a private equity firm, has closed its third fund with total commitments of £100 million (€148.6 million; $186.1 million). The Kelso Place UK Special Situations Fund has been raised from Kelso's two co-founding principals John Drinkwater and Sion Kearsey and two family offices, all of whom are investors in previous Kelso Place funds. A placement agent familiar with the fundraising said the two family offices were those of Michael Sherwood, the co-chief executive of Goldman Sachs' business outside the US, and Jonathan Green, a retired hedge fund manager and ex-Goldman banker. Green co-founded GLG Partners, a hedge fund.

3I MAKES CORNERSTONE INVESTMENT IN SVG FUND
3i has made a commitment to Strategic Recovery Fund II, an SVG Capital fund applying private equity techniques to public companies. Adam Steiner, head of research, public equities at SVG Capital, declined to comment on the amount 3i has committed to the fund, but said that the firm is a “cornerstone investor”. As part of the investment, 3i managing director Alan MacKay will join SVG's advisory board. The fund invests in public companies using “private equity techniques”, including in-depth deal sourcing and evaluation and input from experienced industrialists.

GIMV COMMITS TO RUSSIA FUND
Eagle Venture Partners, a private equity firm which manages Belgian private equity firm GIMV's investments in Russia, has held a first close on its latest fund with $30 million (€24 million) of commitments. The Eagle Russia Fund received $10 million from GIMV, as well as $10 million from Moscow Narodny Bank, a British investment bank focused on Russia. A further $10 million was committed by undisclosed private investors. GIMV said in a statement that a target size of between $60 million and $100 million has been set for the fund, of which it will contribute up to $20 million in total, with Moscow Narodny Bank providing a maximum of $15 million.

PARTNERS GROUP CLOSES €1BN SECONDARIES FUND
Partners Group, a Swiss listed fund manager, has held a final close on Partners Group Secondary 2006 Fund, the firm's second fund dedicated to global secondaries, with €1 billion ($1.25 billion) of commitments. The fund will invest in secondary positions in the US, Europe and Asia. Partners Group has been one of the most active fundraisers in Europe this year, having already raised €1.6 billion in the last five months. The firm held a final close of the second vehicle in a twin-fund European buyout programme in October, raising €647 million for the two funds. In July, Partners Group closed a €282 million mezzanine fund, shortly after raising $375 million for an Asia-focused fund of funds in May.

INNOVATIONSKAPITAL RAISES SKR1BN FOR INNKAP 4
InnovationsKapital, a Nordic-focused private equity firm, has closed its fourth venture capital fund with Skr1 billion (€108 million; $137 million) of commitments. Investors in the previous fund who re-allocated for InnKap 4 were Access Capital Partners, Chalmers University of Technology, The First Swedish National Pension fund, The Third Swedish National Pension Fund, W Capital and the Wellcome Trust. New investors in the fund included BP Pension Fund, DnB NOR, Etera, KLP Insurance and Wega Support. In total, InnKap 4 had approximately 20 investors from Europe and the US.

HANDS SOUNDS WARNING FOR INVESTORS
Guy Hands, the founder and chief executive officer of buyout firm Terrra Firma, has cautioned investors to be more discerning lest they become “third class passengers” on the private equity bandwagon. Speaking at a conference in London, Hands said there were now three classes of investors in private equity and the worst off were those sat in “economy”. He said: “They pay high fees for bad deals and get no access to good deals.” By contrast he said those sitting in first class get co-investment rights in good deals and pay no fees, while business class get access to good deals and co-investment rights but pay high deal fees. This situation had come about Hands said because demand for the asset class had hit unprecedented heights, allowing managers to skew terms in their favour.

SEP RAISES $300M VENTURE FUND
SEP, a UK venture capital group, has raised approximately £160 million ($300 million; €236 million) for its new fund, SEP III. The firm said the fund closed over-subscribed and above target. Most of the significant current investors in SEP funds have invested in SEP III, including the European Investment Fund; Foreign & Colonial Private Equity Trust; and Royal Bank of Scotland. The fund has also attracted participations from a number of new institutional investors from across Europe, including Swiss Re, Skandia, Scottish Widows Investment Partnership, Gartmore, Cooperative Insurance Society and Finama.

GERMAN MANAGER DOUBLES UP FUND SIZE
ECM Equity Capital Management (ECM), a Frankfurt-based private equity firm, has held a final close of its third fund at its hard cap of €250 million ($317 million). German Equity Partners III (GEP III) closed above its original target of €200 million and double its predecessor, which raised €125 million in 2000 and is fully invested. ECM said that GEP III received commitments from 16 investors, of which were 80 percent re-upped from GEP II. Approximately 34 percent of commitments came from funds of funds; 24 percent from banks; 15 percent from insurance companies; and the balance from other institutions.

CORPFIN CLOSES SPANISH FUND ON €223M
Corpfin Capital, a Spanish mid-market private equity firm, has closed its third private equity fund with total commitments of €223 million ($283 million), passing its original target of €200 million. Corpfin Capital Fund III held a first close in January of this year with €100 million of commitments. The firm began marketing the vehicle in March 2005 with Helix Associates as placement agent. Investors in Corpfin Capital Fund III included Bankinter, CAAM-CI, Fondinvest, Sofina, Scottish Widows, West Midlands Pensions Funds and pension funds managed by BBVA and Caja Madrid.

CVC NEARS €4BN ‘SIDE-CAR’ CLOSE
CVC is in the final stages of raising a bolt-on fund reported to be in excess of €4 billion to be deployed alongside the €6 billion one it raised just last year. According to a report in the Daily Telegraph, a UK daily paper, CVC's fundraising is going well and, although an initial €3 billion to €4 billion target was set, there is no upper limit. One investor said the new fundraising was a welcome opportunity for additional exposure to CVC. However, the report said CVC would not list the fund on a stock exchange. CVC will tap the new fund when its existing funds allocate more than €250 million into an investment.

ACCESS CAPITAL ADVANCES TECH FUND OF FUNDS
Access Capital Partners (ACP), a Paris-based fund of funds manager, has held a second close of its third technology venture capital fund of funds with €75 million ($95 million) of commitments. A final close is expected in December, at its original target of €100 million. Approximately 15 investors have made commitments to the fund, with limited partners coming from France, the Netherlands, Finland, Denmark and Germany. ACP did not use a placement agent, but Philippe Poggioli, partner and cofounder of ACP, said that there were strong re-ups from the existing investor base and intermediaries had been used to make introductions to two new investors.